Skopje, 30 September 2023

Geoeconomic fragmentation is a global risk which could significantly affect global trade and financial flows, and thus the economic growth, especially in smaller and less developed economies.  Losses from the long-term restrictions of global flows of goods, services, finance and technology are estimated from 0.2 to 12% of the global GDP, depending on the assumptions and scenarios.  The conference pointed out that, in the long run, only the trade fragmentation, i.e. division of countries into blocs that trade only with each other can reduce the annual GDP by 7% or Euro 7 trillion, that is the GDP of France and Germany combined. The effects will be more pronounced for the small developing countries, especially the Western Balkan countries, where the globalization was the driver of the income convergence, which albeit doubled in the past two decades, still amounts to 40% of the EU average.  Hence, accelerated instead of decelerated global integration is needed, supported by enhanced implementation of structural reforms.  This was said at the ninth international research conference organized by the National Bank. 

Within her opening address, the Governor Angelovska Bezhoska pointed out that “according to certain assessments, deglobalization may reduce the global import by 30%, which could adversely affect the less developed economies which are mostly import-dependent and have a greater need for external financing of their economies.

The second and the third panel discussions at the Conference discussed the challenges posed by the geoeconomic fragmentation in certain segments, as well as the policies for EU’s regional perspectives in the global environment.

The panel discussion titled “Open Strategic Autonomy, Fragmentation and its Meaning to Central Banking”, mediated by the former Director of the IMF European Department, Paul Thomsen.  It was attended by the Head of Macroeconomic Analysis at the Bank for International Settlements, Benoit Mojon, the Governor of the Central Bank of Lithuania, Gediminas Simkus, the Governor of Central Bank of Armenia, Martin Galstyan, Elina Ribakova from the Peterson Institute and the Head of European Stability Mechanism, Giovanni Callegari. The panel discussion pointed out that geopolitical developments strongly affect trade and financial flows in the new reality.  Geoeconomic fragmentation poses number of macroeconomic risks related to supply chains, financial markets, economic development and stability.  It also brings challenges to central banks as well, which should be prepared for frequent shocks on the supply side, which may become less flexible.  It is important to work on protective mechanisms, especially through international financial institutions.

The last panel discussion at the Conference titled “ Policy Panel on the Regional EU perspective” mediated by Peter Sanfey, the Deputy Director of the European Bank for Reconstruction and Development, and attended by the Minister of Finance of the Republic of North Macedonia Fatmir Besimi, the Governor of the Central Bank of Albania, Gent Sejko, the Deputy Chief economist at the European Commission, Paolo Pasimeni, the Head of Economic Study Division at the EIB, Loren Marin, Julia Woerz  from the Austrian National Bank and Ranka Miljenovic, the Executive Director of the  European Policy Centre. The panel discussion emphasized the importance of bringing Western Balkans closer to the single European market, as well as the improvement in the past period in the terms of the trade structure, since the exports of the region towards EU has a higher growth compared to imports.  The latest trends of moving the production capacities closer to supply, or in countries which are political and economic collaborators, represent an opportunity for accelerated growth in foreign direct investments in the Western Balkans region.